The Netflix of mobile gaming has launched (NFLX)

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Mobile monetization firm Upstream has launched a new HTML5-based gaming platform that lets users pay a weekly subscription fee in exchange for access to a library of ad-free games, according to Business of Apps.

Gamedom, which was developed in partnership with game distribution platform GamePix, will offer users access to more than 100 game titles across 10 categories, for an average of $1.10 (1 euro) per week.

Gamedom is targeting emerging markets, where the cost of phone data and app downloads is a barrier to app use for many smartphone users. By using a business model that mimics that of popular subscription-based video and music streaming service providers like Netflix and Spotify, Gamedom will likely be particularly popular in emerging markets, where the high cost of data and low GDP make downloading apps too cost prohibitive to drive growth. For now, Gamedom is available only in Brazil and Nicaragua, but Upstream is working diligently to bring the portal to other emerging markets, such as Qatar and Nigeria.

In these markets, the traditional app store model is causing friction for a number of reasons:

• Apps are expensive. In Brazil, for example, the average cost of an app (~$3 USD) equates to 14.2% of a user’s daily income, according to Trading Economics.
• In-app ads eat up too much data. The ad-laden interface of many freemium apps can be a drain on monthly data caps. In emerging markets, the cost of data accounts for a large share of users' weekly wages, making it impractical to use these apps.
• Apps take up space on users’ phones. This is particularly true in emerging markets, where low-end devices with less memory are more popular.

Subscription models lower the cost barrier that many consumers in emerging markets face. Emerging markets are quickly embracing the subscription model, according to a separate study by Upstream. About 39% of consumers in developing markets, such as Brazil, Egypt, Indonesia, Nigeria, and South Africa, use some form of subscription to access mobile digital services.

Moreoever, users can pay through carrier billing, which offloads the need for users to input their payment information, instead paying through their monthly data bills. This also increases the platform’s reach. In-app payments often require a credit or debit card. Historically, payment cards haven’t been widely used in developing nations because the infrastructure to accept these cards simply didn’t exist, notes BI Intelligence. 

A subscription-based app distribution platform is the next logical step from traditional app store distribution models, such as the App Store. Although Upstream doesn't yet plan to bring Gamedom to developed markets like the US or UK, it makes sense that a distribution platform that leverages the subscription service would gain traction in these markets, just as Netflix and other content streaming service providers have.

Such a service would not need to be purely subscription-based; it could make sense to offer a tiered service, similar to Hulu's, which reduces ads as consumers pay more. This would benefit app publishers, which would be given a cut of the fee in return for making their apps available on the site, rather than having to compete against larger companies for users' attention in the App Store and Google Play store.

Over the past eight years, developers have flocked to create mobile games as smartphones became a mainstream consumer device. Technological evolutions including faster processors, larger screens, more input points, and better overall graphics capabilities, combined with dropping prices, brought the ability for gaming via smartphone to audiences larger than ever before.

In that growth and through that transition, smartphones as a gaming arena experienced its own evolution. More developers flocked to this medium, and the gaming sections of app stores became saturated. While mobile gaming apps using an up-front paid downloading model, wherein consumers paid a typically nominal fee to download an app, flourished in the early days of mobile gaming, the deluge of apps led to a change in monetization strategy.

More apps started using the free-to-play (F2P) model, wherein a consumer can download an app for free, and is then later monetized either via in-app purchases or in-app advertising. Since that transition, most consumers have been conditioned to expect quality mobile gaming apps for little or no cost.

Jessica Smith, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile gaming that examines how the mobile gaming market has been affected by the transition to F2P monetization.

It also takes a close look at how saturation in the mobile gaming category, combined with the standard F2P model, has led to numerous issues for developers, including spiking marketing costs, the premium on acquiring users who will spend heavily within a game (called whales), and the impact that it's having on mobile gamers who do not spend in-app. The report then identifies innovations in mobile app marketing and engagement that seek to alleviate the issues of F2P and inadequate monetization in the fact of mounting marketing costs.

Here are some key takeaways from the report:

• The mobile gaming app market is so big it makes other app categories seem small by comparison. Mobile gaming apps accounted for 20% of active apps in Apple's App Store in March 2016, according to AppsFlyer. That’s more than double the second most popular category, business apps.
• It's only going to keep growing as quality smartphones become more accessible and more consumers look to their smartphones for gaming. In the US alone, 180.4 million consumers will play games on their mobile phones in 2016, representing 56% of the population and a whopping 70% of all mobile phone users, according to estimates from eMarketer.
• This quick growth is resulting in numerous growing pains. Saturation in the market has led to the dominance of the free-to-play (F2P) monetization model, which in turn has led to sky-high marketing costs.
• As marketing costs for mobile gaming apps has skyrocketed, so has the tendency for apps to focus on the very small segment of players who spend money in-app. This has resulted in game mechanics that optimize the amount of money being spent by this small user group, which can often alienate the large swath of users who do not spend money in-app.
• There are numerous new solutions coming to market that offer developers and publishing houses a diverse selection of monetization models which combine in-app purchases with other methods.

In full, the report:

• Sizes up the current mobile gaming app market and its future growth trajectory.
• Examines the role of free-to-play (F2P) games in the greater mobile gaming ecosystem.
• Identifies the major threats and opportunities inherent in the current mobile gaming market and in peripheral markets such as marketing.
• Explains the current monetization conundrum wherein the vast majority of revenue comes abysmally small segments of mobile gamers.
• Presents new approaches and solutions that can help mobile gaming apps monetize without alienating swaths of mobile gamers.

To get your copy of this invaluable guide, choose one of these options:

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The choice is yours. But however you decide to acquire this report, you’ve given yourself a powerful advantage in your understanding of the world of mobile gaming.